THE BLOG
07/16/2013 06:16 pm ET Updated Sep 15, 2013

The Measure of a Nation

As Americans, we typically assume our way is best. There is some good reason for this. America is clearly the world's leader in economic, military, media and political power. But if we take a deeper look, by many important measures, our national standing and assets have been steadily declining for more than a generation now.

The U.S., for example, ranked near the bottom of the barrel -- at number 26 -- in an April report by the United Nations on child well-being in the world's 29 richest nations. The Netherlands, Norway, Iceland, Finland and Sweden topped the list.

Similarly, London-based Legatum Institute's recent ranking of the world's most high performing nations relative to wealth and well-being placed the United States at only number 12, down two spots from its last survey. The high-ranking nations in that survey included, again, many of northern Europe's leading countries.

Other measures show the U.S.'s disturbingly weak performance in allied areas of public concern. For example, the Center on International Benchmarking in Education's current list of the world's top 10 education systems does not include the United States. And the Washington, D.C.-based Center for Strategic and International Studies Global Aging Preparedness Index (which measures nations' relative economic preparedness to address the growing needs of the elderly) places the U.S. at number 11 behind India, Mexico, Chile, China and Russia.

We may not like the story these indices reveal, but whatever the inconvenience of the disturbing trends they speak to, it is essential to acknowledge and begin to meaningfully address the hard reality: America's future prospects for economic growth, opportunity and continued global leadership are in jeopardy.

Data matter a great deal in assessing the social investment needs of advanced democratic societies. In fact, such metrics, though hardly decipherable or interesting to most people, are vitally important. They operate like a thermometer or a CT scan at the physician's office. They give us early and important clues about essential interventions that may be required to avoid calamity. Just like at a health clinic, recovery fundamentally requires the patient's honest acceptance of the problem and a dedicated commitment to healing. In America, we fail to use appropriate diagnostic tools to act on the measurable signs of our nation's economic ills at our own great risk.

The prestigious "Stiglitz Commission," led by Nobel Laureates Joseph E. Stiglitz and Amartya Sen, implicated outdated measurement systems as contributors to the perfect storm that became the recent Great Recession. The commission observed that greater awareness of the limitations of standard metrics likely would have dampened misplaced public euphoria over economic performance in the years prior to the crisis. (For example, metrics that incorporated increasing household indebtedness would have provided a more cautious view of global economic health.)

Unfortunately, most countries today still lack a timely and complete set of wealth accounts -- the 'balance sheets' of the economy -- that provide a more comprehensive picture of assets, debts and liabilities among their economies' main actors. In America, we too could do better to bolster our assessment capacities in these connections.

The timeliness and need for this is not limited only to federal level reporting. Even some state governments have begun to question the wisdom of relying on traditional economic measures to inform policy. The State of Maryland, for example, says on its official website: "Traditional indicators like the Gross Domestic/State Products address only economic transactions. They do not include the environmental and social costs of what we buy, the quality of life impacts of how we live, or fully appreciate the significant contributions of our natural systems."

Our nation's inadequate system of metrics and measurements related to socioeconomic well-being is a growing problem. Measures like the Federal Poverty Thresholds, for example, capture less than half of the households teetering on the brink by not accounting for important factors like the soaring costs of health care, housing and transportation or the 44 percent of households that don't have savings to last them even three months should they lose their income.

A patchwork of nongovernmental indices has emerged in recent years to benchmark more fully how households are faring and to document the need for increased public support investments. But absent agreed terms and definitions, sampling methodologies and baseline measures, they often lead to fuzzy or even conflicting implications.

Available indicators are also generally quite lacking when it comes to accounting for the full breadth of economic hardship faced by particular groups -- especially people of color, women, children and the elderly, whose growth in numbers and needs is disproportionately greater than the national average.

We need unified, informative and inclusive assessments of our nation's socioeconomic realities to support more effective and sustainable responses to poverty and economic inequality in America. And we need to focus much more of our national investment resources on our neediest population groups, whose success -- and the nation's -- hinges on their ability to gain access to good schools, jobs, careers and investment opportunities.

This week in New York City, the Insight Center for Community Economic Development will convene an important conference of leading American social and economic think tanks, nonprofits, academicians and foundations to explore opportunities to develop the next generation of socio-economic indicators. It is a conversation that we and our counterparts in the policy-making arena must advance in the months and years to come. Failure to do so will only help to accelerate our nation's slide to the bottom of the industrialized world in areas that matter greatly to what America stands for. As a nation, we can and must do better.

Henry A. J. Ramos is President & CEO of the Insight Center for Community Economic Development and an appointed member of the California Community Colleges Board of Governors.